Automation is Changing American Industry

The American economy remains the strongest in the world but technology advances are expected to have a major impact on a range of American industries as illustrated by the table below.

Montrose Group Automation

Source: U.S. Bureau of Labor Statistics

Current economic projections see overall job growth in professional services, educational services, and health care while most other industry job growth remains steady or declines. Large declines are anticipated to continue in manufacturing, financial services, and government jobs.

Automation is a major driver in changes for the American economic landscape. Automation has been making America’s manufacturing industry the most competitive and productive in the world but it is also played a large part in dropping the number of manufacturing jobs in the U.S. About 9% of the US workforce is in manufacturing and this total has dropped from over 30% in the 1950s. However, recent advances in machine learning, robotics and artificial intelligence are driving major changes in the economic marketplace all of which impact a region’s economic development strategy. More importantly, automation is expanding beyond manufacturing into the service sector which dominates the US economy.

Automation is having a major impact on retail. The growth in e-commerce matched by the evolution of robot technology are making major changes in the retail industry. The retail industry employs roughly 16 M Americans and nearly half of these retail workers are at risk of losing their jobs to robots and other automation technology.[xxxiv] Retail cashiers will suffer the most job losses from this industry that covers one in ten American workers. As an example, Wendy’s recently purchased a 1000 kiosks that are replacing workers taking and processing food orders in their restaurants and the pay-off for this investment is only expected to take three years.

The financial services industry will also see major changes spurred on by automation and the advances of Artificial Intelligence. McKinsey estimates the 25% of the current jobs in the American insurance market will be gone in 10 years.[xxxv] Insurance positions in operations and administrative support are especially likely to be consolidated or replaced but jobs in information technology and operations will see declines as well in the insurance industry.[xxxvi]However, new positions will be created as the insurance industry goes digital from a customer service standpoint and also benefits from the use of Artificial Intelligence for repetitive back-office jobs now performed by humans.[xxxvii] The impact of automation on the insurance industry illustrates that “white collar” as well as “blue collar” jobs are at risk.

Similar predictions of job losses and productivity increases are seen in the banking industry with the growth of digital banking and spread of 400,000 ATMs across the United States.[xxxviii] The banking industry is leading the way in automation of back office functions. As an example, JPMorgan Chase created a Contract Intelligence platform to analyze legal documents and extract important data points and clauses to replace the manual review of 12,000 annual commercial credit agreements normally requiring an estimated 360,000 hours now done in seconds.[xxxix] Wells Fargo created a virtual assistance launched through a Facebook application to assist customers with resetting account user names and passwords.[xl] Bank of America has seen their mobile banking customer base gain from 12 M in 2012 to 22 M in 2016 and they created a mobile banking virtual assistant, named Erica, to assist mobile banking customers with a range of operational and financial needs.[xli]

Health care, a growing sector of the American economy, will of course be impacted by automation. McKinsey estimates that about 36 % of the health care industry has the technical potential for automation but only 30% of a registered nurse’s daily activities could be automated, compared with 13 percent of a dental hygienist’s daily activities.[xlii] Not all the industry news related to automation is bad for workers and customers. Health care is a prime example. Walter Reed Medical Center is using Artificial Intelligence to better predict medical complications and improve treatment of severe combat wounds, leading to better patient outcomes, faster healing, and lower costs.[xliii] Data analytics tools are predicting complications to enable preventive treatment to reduce hospital-acquired infections at Johns Hopkins University.[xliv] The current transition to electronic health records, predictive analysis of health data may play a key role across many health domains like precision medicine and cancer research.[xlv]

Artificial Intelligence is expected to dramatically transform the transportation industry. Smart Traffic management applications are reducing wait times, energy use, and emissions by as much as 25 % in some places.[xlvi] Smart Traffic systems help cities leverage the type of responsive dispatching and routing used by ride-hailing services, and linking it with scheduling and tracking software for public transportation to provide just-in-time access to public transportation that can often be faster, cheaper and, in many cases, more accessible to the public.[xlvii] AT&T’s network serves as the fiber backbone for the operation of Smart City applications across the U.S. where communities build a sensor network often located on utility poles or streetlights that monitor and provide public service, traffic, safety and utility monitoring services.

Finally, while many traditional retail centers will struggle through the e-commerce revolution thousands of new jobs are being created. Amazon opened a record 26 fulfillment centers in 2016, which represented about a 30 % annual increase of square footage supporting fulfillment and shipping operations compared to 2015.[xlviii] This new face of retail is creating thousands of jobs and transforming low job producing distribution centers and reviving closed Malls. As an example, Amazon announced plans for a 650,000 square foot fulfillment center at the closed Euclid Square Mall and this decision followed an even larger Amazon center in North Randall, Ohio where Randall Park Mall once stood.[xlix]

Automation will have a major impact on American business. Some industries will lose and some will gain but change is the only thing guaranteed.

[xxxiv] “Retail Automation: Stranded Workers? Opportunities and risks for labor and automation,” Capestone Capital Group, May 18, 2017.


[xxxvi] Ibid.

[xxxvii] Ibid.



[xl] Ibid.

[xli] Ibid.



[xliv] Ibid.

[xlv] Ibid.

[xlvi] Ibid.

[xlvii] Ibid.


[xlix] Ibid.